HANOVER, Germany (Feb. 23, 2010)—Continental A.G. management expects the company to generate a “significant” improvement in operating profits this year based on the anticipated recovery in global demand for consumer vehicles and the positive effect that should have on the company's automotive group.
Conti management expects the global output of cars and light commercial vehicles to increase by roughly 7 percent over 2009, a recovery that should help the firm at least double the automotive group's adjusted pre-tax operating income. Coupled with the rubber group's stable earnings outlook, Conti overall should improve on its 5.8-percent earnings/sales ratio last year.
Conti expects sales to grow this year by at least 5 percent after they dropped 17.1 percent last year to $27.9 billion. Conti anticipates the passenger and light truck tire replacement markets to recover by 2 to 4 percent in Europe and North America but said it is still difficult to determine sales opportunities in the truck tire replacement market.
One of the major challenges this year will be raw material prices, Conti said, which have increased considerably since November.
Conti said it is budgeting an increase in capital investments this year of nearly 50 percent after shrinking them last year by about the same amount.